Chairman’s Statement

Dear Shareholders,

We live in a rapidly changing and evolving world. People everywhere face digital disruptions which are changing the way they live, work, play, and interact with one another. Companies must likewise adapt to the changing environment to stay relevant and ahead of competitors.

Whether it is the growing prevalence of e-commerce, increasing shift towards renewables, needs of ageing population or rapid urbanisation in many countries, these megatrends present both challenges and opportunities that the Group can harness.

Amidst these tectonic shifts, Keppel strives to become a stronger, more innovative, and more sustainable company, with different business units collaborating to harness synergies in providing solutions for sustainable urbanisation. Keppel continues to deliver projects, enter new markets, seize new opportunities, and establish vehicles and engines for growth.

Rebuilding Trust Last December, we closed a painful chapter with the global resolution reached by Keppel Offshore & Marine (Keppel O&M) with criminal authorities in the US, Brazil and Singapore over corruption investigations in Brazil.

We regretted and are deeply disappointed by the misdeeds of certain Keppel O&M executives, which we now know to have taken place in Brazil. We have dealt firmly with the issues, including imposing sanctions and separation from these executives, and enhancing the Group's compliance regime. Integrity is one of Keppel's core values. We do not and will not tolerate any illegal activity in the conduct of our business.

The past practices uncovered at Keppel O&M do not reflect how the Keppel Group conducts business today. We have put in place significant enhancements to the compliance and internal controls systems across the Group to ensure that such unacceptable behaviour will not be repeated.

The Board and management are determined to hold the Company to the highest ethical standards and to rebuild and regain the trust which had been lost. Keppel will win business legally and ethically, on the merit of our collective strengths of superior solutions and execution. Resilience of Our Multi-Business Strategy We have stayed on track with our multi-business strategy, which continues to steady the ship through stormy weather.

Keppel will push ahead with our growth strategy, harnessing Group synergies and strengths from all our businesses. We will also strive to become a stronger, more disciplined and more sustainable company.

Lee Boon YangChairman

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Group Overview

1.Hilli Episeyo, the world’s first FLNG vessel conversion, was completed with an excellent safety record.

For the whole of 2017, the Group achieved a net profit of $217 million, after taking into account the one-off financial penalty from the global resolution of $570 million, and $49 million of related legal, accounting and forensics costs. Without these one-off items, the Group would have achieved a net profit of $836 million, an increase of 7% over FY 2016, underpinned by earnings growth in the Property, Infrastructure and Investments Divisions.

The Group’s Economic Value Added for the year was negative $834 million, while our Return on Equity (ROE) was 1.9%. Excluding the one-off financial penalty and related costs, our ROE would have been 7%.

The Company has ring-fenced the financial penalty from the global resolution and related costs when considering the dividend payout for the year. Taking into account the Group’s improved performance, excluding the one-off financial penalty from the global resolution and related costs, our stronger cash flow position and the lower gearing, the Board of Directors is proposing a final dividend of 14 cents per share. Together with the interim cash dividend of 8 cents per share distributed last August, we would be paying out a total cash dividend of 22 cents per share to shareholders for the whole of 2017, compared to 20 cents for 2016.

Offshore & MarineWhile the Offshore & Marine (O&M) sector still faces challenges, we remain confident about Keppel O&M in the long run, given our strong track record and capabilities.There is growing optimism about the O&M industry following the recovery of oil prices and increase in offshore rig transactions. However, the rig market continues to be weighed down by a severe supply overhang, and both utilisation and day rates remain low. A quick recovery of the newbuild rig market is thus unlikely. Nevertheless, we continue to see opportunities in the demand for production assets, Liquefied Natural Gas (LNG) solutions and specialised vessels.

In 2017, Keppel O&M delivered 10 major projects, and secured new contracts worth about $1.2 billion, including Floating Production Storage and Offloading conversions, LNG containerships, LNG carriers, dredgers and a Tension Leg Wellhead Platform project. This is a significant increase from the $500 million of new orders in 2016. As at 31 December 2017, Keppel O&M’s orderbook stood at $3.9 billion, excluding the contracts from Sete Brasil.

Despite the challenges in the jackup market, we continue to work closely with customers to seek win-win outcomes. Keppel FELS closed a deal for the novation of five Transocean rigs to Borr Drilling,

which improved the Division’s cash flow. The first of the five rigs has been delivered at the start of 2018, while the others will be progressively delivered over the next three years.

Keppel O&M is actively pushing into new markets, such as the LNG business. With our ability to design, develop and integrate solutions across the gas value chain, Keppel is poised to be the gas industry’s preferred partner and enabler.

We are proud to have delivered Hilli Episeyo, the world's first Floating LNG (FLNG) vessel conversion, that was completed in partnership with Golar LNG with an excellent safety record of close to 20 million manhours worked without Lost Time Incidents. The FLNG vessel has arrived in Cameroon, and is expected to be a game changer in the LNG industry, providing a solution that is not only more cost effective but also much faster to market.

Keppel O&M has also entered into a Heads of Agreement with Pavilion Energy and Indonesia’s state-owned PT Perusahaan Listrik Negara to explore opportunities in the development of small-scale LNG solutions for West Indonesia.

Keppel AmFELS, a wholly-owned subsidiary of Keppel O&M, made headway into the

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market for Jones Act vessels in the US, securing a contract worth more than US$400 million from Honolulu-based Pasha Hawaii for the construction of two LNG dual-fuel containerships.

Apart from seeking new revenue streams, Keppel O&M is taking advantage of the downturn to streamline and reorganise its operations. Keppel O&M has reorganised its operations into two divisions – the New Builds division, covering Offshore as well as Gas & Specialised Vessels, and the Conversions & Repairs division, to better leverage the different capabilities within the Group, and emerge more efficient and competitive.

Property The Property Division continues to be the largest contributor to the Group’s bottomline. We are transforming Keppel Land to be a multi-dimensional real estate player, with a focus on being a real estate company with one of the highest rates of return in Asia.

In 2017, we received strong and positive response to our homes across Asia, transacting more than 5,480 units at a total sales value of about $2.8 billion. Of these, some 3,725 homes were sold in China, 1,110 in Vietnam, 380 in Singapore and 270 in Indonesia.

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Keppel Corporation Limited | Report to Shareholders 2017

Chairman’s Statement

With a landbank of about 63,000 residential units, Keppel Land is not under pressure to acquire land, and will do so very selectively. We can even choose to monetise part of this sizeable landbank, if there are good opportunities.

In 2017, Keppel Land announced five divestments totalling more than $1 billion involving projects mainly in China and Indonesia. We also made investments amounting to about $1.6 billion, including the acquisition of residential sites in Singapore, Wuxi, Ho Chi Minh City and Bangkok, thus better positioning the Group for long-term growth.

On the commercial front, Keppel Land has about one and a half million square metres of gross floor area, either completed or under development. When fully stabilised, this portfolio can generate an annual net operating income of about $300 million.

During the year, we deepened our presence in key markets in Asia. In Shanghai, Keppel Land China and Alpha Investment Partners, together with a co-investor, collaborated to acquire an office and retail mixed-use development, Trinity Tower (formerly known as SOHO Hongkou), for approximately US$525 million. We also increased our stake in the landmark mixed-use development, Saigon Centre, in Ho Chi Minh City, and expanded our presence in the Junction City development in Yangon, another market which Keppel Land has been in for many years.

Infrastructure2017 marked several significant milestones for our infrastructure business as we strengthened our positions in energy and environmental infrastructure, as well as data centres and logistics. They demonstrate how the Group is growing in our breadth of expertise and range of solutions.

Keppel Infrastructure continues to seek value-enhancing projects, leveraging its project development, engineering, and operations and maintenance expertise. The company began the year with the signing of the 25-year Water Purchase Agreement with PUB, the national water agency, for Singapore’s fourth desalination plant. The first of its kind in Singapore, the Keppel Marina East Desalination Plant will be a large-scale dual-mode desalination plant that can treat both seawater and freshwater when it is completed in 2020.

Keppel Infrastructure has also concluded an agreement with the Singapore Economic Development Board to develop, own and operate a state-of-the-art environmentally sustainable gasification facility on Jurong Island, which will be well positioned to meet the anticipated future demands of Singapore’s refining and chemicals industries. Securing the agreement is an important step in the preparation for the final investment decision, which will be taken at a later date.

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Group Overview

Beyond Singapore, Keppel Seghers and Zhen Hua Engineering Co Ltd have secured a $5.3 billion contract to design, build and operate Hong Kong’s first Integrated Waste Management Facility. Keppel will provide its proprietary waste-to-energy technology and participate in the EPC (Engineering, Procurement and Construction) phase of the contract and subsequently undertake the operations and maintenance of the facility for 15 years after it is completed in 2024. Keppel Seghers also further reinforced its position as a leading provider of waste-to-energy solutions in China by securing two new contracts to provide technology solutions to plants in Beijing and Hunan.

Our data centre and logistics businesses under Keppel Telecommunications & Transportation are making good progress. Over the past year, the global data centre industry has continued expanding, bolstered by the burgeoning growth of cloud service providers as well as increasing storage and processing requirements due to end-user adoption of new technologies and data sovereignty regulations.

Keppel Data Centres has injected its interest in Keppel DC Singapore 4 into the Alpha Data Centre Fund (Alpha DC Fund). It has also invested in a US data centre start-up, Nautilus Data Technologies, which has developed patented water-cooling technology in pre-fabricated facilities that present more cost-efficient and environmentally-friendly solutions than traditional structures. Through the investment, we can also explore opportunities for collaboration and harnessing of synergies within the Keppel Group, such as by tapping the Group's capabilities in the O&M sector for the development of floating water-cooled data centres.

1.Riding on positive market sentiments, Keppel Land will continue to deepen its presence in growth markets with projects such as Empire City in Ho Chi Minh City, Vietnam.

2.When completed in 2020, the Keppel Marina East Desalination Plant will contribute to the Group's recurring income.

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We are reshaping our Logistics business to tap into fast growing market sectors, such as e-commerce and urban logistics. In October, Keppel Logistics launched UrbanFox, an omnichannel logistics and channel management solutions brand with end-to-end capabilities from e-commerce channel management, warehousing and inventory management to last-mile fulfilment.

InvestmentsKeppel Capital actively pursues both organic and inorganic growth opportunities for its integrated asset management platform.

In 2017, the REITs and Trust managed by Keppel Capital continued to deliver positive total returns to unitholders and made several strategic acquisitions which strengthened their sustainable income streams. Riding on the attractive prospects of Australia’s office market, Keppel REIT acquired a 50% interest in a premium office tower to be built at 311 Spencer Street, its second asset in Melbourne. Keppel DC REIT acquired a 90% interest in Keppel DC Singapore 3, its third Singapore asset, and a second data centre asset in Dublin.

Keppel-KBS US REIT was successfully listed on the Singapore Exchange on 9 November 2017, raising about US$553 million. The US commercial real estate investment trust, jointly sponsored by Keppel Capital and KBS Pacific Advisors, is part of Keppel’s efforts to expand our asset management business into new geographies and asset classes.

The Alpha DC Fund had closed at a total of about US$1 billion, double the initial target size of US$500 million. The strong interest garnered and successful closing of the Fund are testament to Keppel’s ability to grow our capital platform with investments from

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Keppel Corporation Limited | Report to Shareholders 2017

Chairman’s Statement

quality institutional investors. The Alpha DC Fund is a prime example of how we can collaborate across the Keppel Group to create and capture value for different stakeholders.

On a fully leveraged and invested basis, Keppel Capital’s assets under management (AUM) has grown from $25 billion in the preceding year to $29 billion as at end-2017. We will continue to grow our AUM, boosting the Group’s funding capabilities and expanding our funding base.

Large-scale Urban DevelopmentsKeppel leads the Singapore Consortium in the development of the Sino-Singapore Tianjin Eco-City (Tianjin Eco-City), which is envisaged to be a model for sustainable urban development, which can be replicated across other cities in China. The Tianjin Eco-City celebrates its 10th anniversary in 2018, and with its growing maturity, we have seen increasing demand for homes and land in the Eco-City. We expect the project to continue to be a long-term contributor to the Group in the years ahead.

To leverage the Group’s capabilities and strong track record in large-scale urban developments, we announced the creation of a new business unit, Keppel Urban Solutions (KUS) in October. KUS will be an integrator of the latest urban solutions, bringing together the diverse capabilities

of the Group, and also collaborating with the best-in-class technology providers, to create vibrant and smart precincts and cities of the future.

KUS will begin by collaborating with Keppel Land to apply our capabilities in the Saigon Sports City (SSC), a 64-hectare township in the prime District 2 in Ho Chi Minh City, Vietnam. We will develop SSC into a bustling hub, combining modern and sustainable urban living with vibrant and healthy lifestyles.

Committed to SustainabilityKeppel is committed to deliver value to all our stakeholders through Sustaining Growth in our businesses, Empowering Lives of people and Nurturing Communities wherever we operate.

Even as we focus on executing our businesses well for strong results, the board and management pay close attention to environmental, social and governance issues, and take them into consideration in the determination of the Company’s strategy and policies. To assist the Board in the discharge of its oversight function, all board committees, namely the Audit, Board Risk, Nominating, Remuneration, and Board Safety committees, are actively engaged and play an important role in ensuring good corporate governance in the Company and within the Group.

We are heartened that Keppel’s sustainability efforts continue to be recognised internationally, with the Company’s inclusion in the DJSI Asia Pacific Index and MSCI Global Sustainability Index, among others. The Securities Investors Association (Singapore) also named Keppel as a winner of its inaugural Sustainability Award.

With people as our most important asset, we are committed to nurture and empower a diverse, competent and dedicated talent pool to drive Keppel’s further growth. This year, we invested over 500,000 hours training Keppelites, which included leveraging e-learning platforms for faster and better reach.

Innovation has always been a part of Keppel’s DNA. To support Keppel’s mission to be a leading solutions provider for sustainable urbanisation, we established Keppel Technology & Innovation (KTI) as a change agent and innovation catalyst for the Group. Through KTI, we aim to transform how Keppel harnesses technology and innovation to create value for our stakeholders, including innovation in business models and the way we work, as well as how we collaborate with third parties to accelerate change.

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1.Keppel-KBS US REIT is part of the Group's strategy to expand its asset management business into new geographies and asset classes.

2.Our volunteers continue to engage children at the Keppel Centre for Art Education in the National Gallery Singapore to inspire creative and critical thinkers.

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Group Overview

Even as we focus on executing our businesses well for strong results, the board and management pay close attention to environmental, social and governance issues, and take them into consideration in the determination of the Company’s strategy and policies.

We have also embarked on transformational projects within the Company – Project Autobots and Project HaRmony – to digitise our infrastructure and harmonise the Group’s finance, payroll, procurement and human resources functions, allowing us to increase productivity, reap efficiencies and achieve better control in the digital economy.

Reflecting our strong focus on safety, Keppel won 36 awards at the Singapore Workplace Safety and Health Awards 2017, the highest number of awards won by a single organisation in the year. While we have made good progress in our safety journey, sadly, we lost three of our colleagues during the year. We must soldier on in our safety pledge to ensure that everyone goes home safe, every day.

We are also focused on making a difference in the wider community, wherever we operate, be it with the underprivileged, promoting education or caring for the environment. Keppelites gave generously of their time and effort away from the workplace, clocking about 12,000 hours of volunteer work in 2017, and exceeding our target of 10,000 hours. Keppel Volunteers brought cheer to more than 1,000 beneficiaries, including children from challenged home fronts and home-alone seniors as well as low-income families. Beyond Singapore, our corporate social responsibility efforts have positively touched lives in China, Vietnam, Indonesia and Brazil, among other countries.

The Keppel Discovery Wetlands at the Singapore Botanic Gardens, restored with

Keppel’s contribution, was officially opened by Singapore’s Prime Minister Lee Hsien Loong in March 2017. It has attracted over 600,000 visitors so far.

AcknowledgementsIn 2018, Keppel turns 50. We have been through the best of times and the worst of times, emerging stronger at every turn. Today, as OneKeppel and with a distinct suite of compelling solutions, we are pursuing and realising opportunities in sustainable urbanisation.

I would like to thank my fellow directors for their invaluable advice and commitment, as we steer Keppel through these challenging times. I am also grateful to our many partners and stakeholders for their unstinting support and continued belief in Keppel. My deep appreciation also goes to Keppelites around the world for their dedication and hard work.

With the support and confidence of all our stakeholders, I am confident that the Keppel Group will grow from strength to strength as we progress beyond the first 50 years.

Yours sincerely,

Lee Boon YangChairman7 March 2018

Employee Volunteerism

12,000hrs Of community work achieved by Keppel Volunteers.

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For more information, go to: page 100

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Keppel Corporation Limited | Report to Shareholders 2017